You know the drill... You can refer back to chapters 10 & 11 for a format for this wiki page. The Accounts Payable/Cash Disbursements (AP/CD) Process
Process Definition
Interacting structure of people, equipment, methods, and controls designed to accomplish the primary process functions.
Process Functions
Handle the repetitive work routines of the AP department and cashier
Support decision needs of those who manage the AP department and the cashier
Assist in preparation of internal and external reports
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> Additional Control Plans for AP & Cash Disbursement
Independent Validation of Vendor Invoices – Authority to record an invoice should come from the purchase order and receiving data
Three Way Matching – Invoice, PO and Receipt. Ensures that items on the invoice were ordered and received.
Independent Authorization to Make Payment – there should be segregation of duties between persons entering invoices to be paid and persons authorized to cut checks for payment
Reconcile Bank Accounts – ensures all disbursements made by the bank are authorized and accurate
The Fraud Connection
Creating Phony Vendors - When the AP clerk has access to the vendor master data and can create a phony vendor. An example is when an AP clerk creates a phony vendor in the company's vendor master data and then opens a business account at a bank for that phony vendor. The clerk can then create and pay phony invoices to that phony vendor and then cash the checks and keep the money. Forging Checks - Could occur if an AP Clerk pays a legitimate vendor invoice twice on purpose and then when the payee sends a checks back for the overpayment, the clerk intercepts and forges the check and keeps the money.
The Accounts Payable/Cash Disbursements (AP/CD) Process
Process Definition
Interacting structure of people, equipment, methods, and controls designed to accomplish the primary process functions.
Process Functions
- Handle the repetitive work routines of the AP department and cashier
- Support decision needs of those who manage the AP department and the cashier
- Assist in preparation of internal and external reports
>> Additional Control Plans for AP & Cash Disbursement
The Fraud Connection
Creating Phony Vendors - When the AP clerk has access to the vendor master data and can create a phony vendor. An example is when an AP clerk creates a phony vendor in the company's vendor master data and then opens a business account at a bank for that phony vendor. The clerk can then create and pay phony invoices to that phony vendor and then cash the checks and keep the money.
Forging Checks - Could occur if an AP Clerk pays a legitimate vendor invoice twice on purpose and then when the payee sends a checks back for the overpayment, the clerk intercepts and forges the check and keeps the money.